The Islamabad Chamber of Commerce and Industry (ICCI) has called upon the government to withdraw amendment made to Section 68 of the ‘Income Tax Ordinance (ITO) 2001’ to change the mechanism of official value of immovable property as it will hurt the property business in the country and discourage investment in real estate and construction sectors.
The government inserted a new sub-section 4 in Section 68 of ITO 2001 stating: “Notwithstanding anything contained in sub-section (1) and (3) the fair market value of immovable property shall be determined on the basis of valuation made by a panel of approved valuers of the State Bank of Pakistan”.
Islamabad Chamber of Commerce and Industry Acting President Sheikh Abdul Waheed said that real estate sector was playing an important role in the development of the country as it was contributing to over two per cent to GDP, fuelling economic growth and creating jobs. However, he said the new amendment in Section-68 of ITO 2001 would have a negative impact on the overall economy as it would discourage the local and foreign investment in real estate and construction sectors. He was afraid that the new move might eventually depress the inflow of foreign remittances in the country as well.
He said if the government was serious about improving tax revenues; it should focus on untaxed sectors and explore other avenues for expanding tax net. He said more than 40 industries were affiliated with the construction industry and changing the mechanism of official value of the property would badly hit construction and its allied industries.
He said such measures would not help the government in achieving its tax revenue targets in view of declining deals in the property sector in future. He said the new law was also against the spirit of the National Housing Policy 2001. He stressed that government should withdraw new amendment in Sec-68 of ITO 2001 and constitute a new committee comprising representatives of ICCI, Islamabad real estate agents and local administration to revise the official value of immovable property in order to save the real estate and construction sectors from further damages.
